A successful business guarantees several components other than a passion for the product or service they sell. The area in which a person resides is an important factor that can affect the company in both directions. Over the past few decades, Dubai has become an inescapable region for entrepreneurs looking to establish a strong position in the Middle East and beyond. With its liberal economic policies, double taxation treaties with most of the world’s countries, modest corporate taxes, abundant infrastructure, and affordable trade routes, Dubai has become the destination of choice for companies and entrepreneurs looking to set up business in Asia. However, setting up a business in Dubai can be a rewarding experience, but the logistics and legal formalities can be overwhelming and time-consuming. The following points serve as a comprehensive guide to starting a business in Dubai.
Select a Business Activity
The type of business you run will determine the type of license you need. There are usually four types of business licenses in Dubai:
- Commercial License for general trading business
- Professional license for service rendering business
- Industrial license for manufacturing goods
- Tourism license for travel and tours sector
The Ministry of Economic Development is the licensing authority and regulates all legal activities related to starting a business in Dubai.
Select a Jurisdiction for Business
The decision in which part of the city you want to start the company should also be carefully chosen. The United Arab Emirates has three different types of jurisdictions – continental or land, free zone and offshore. The company office on the mainland makes it possible to do business in the local market as well as outside the UAE without any restrictions. Free zones are located in specially designated areas within Emirates and are permitted to conduct business activities in these territories or outside the UAE. An offshore company is a resident in a different jurisdiction while the parent company resides in a different country. This is not a branch office as it does not require a physical office. They are not physically present in the country where they wish to register as an offshore company.
Select a Business Structure
Dubai offers entrepreneurs a wide variety of business structures to choose from. Depending on the type of your company and its location, choose the structure, there are certain rules for the composition of the company, for example, if someone wants to establish a legal advisory company, it can only be done as a branch of the company or as an independent company. The types of business structures offered in Dubai are;
- Limited Liability Company
- General Partnership
- Professional Company
- Sole Proprietorship
- Joint Venture
- Public Shareholding Company
- Private Shareholding Company
Registration of Company Name with DED
Choose the same company name as another company in Dubai; the name will not be accepted if this is the case. Once the name is approved, register with the DED. Registration usually takes 3 days and is valid for 6 months.
Get Approval on the Business Activity
Several commercial activities are not allowed under the DED Act. According to Law no. 13 of 2011, DED is the authorized body that decides, regulates, classifies, approves, and gives permits for all economic activities. However, this does not apply to free zones and offshore business terminations.
Get an Office Space
The office space is only required if the company is on the mainland. The lease agreement, documents from the Real Estate Regulatory Authority (RERA), and EJARI must be presented, after which the initial approval is given by the DED. Professional business setup firm offers its customers innovative, collaborative office space at low prices.
Get Basic Approval from DED
This is DED’s pre-approval for company registration, which can be obtained by filling out an application form and attaching supporting documents to the authorities. You can start your business at this stage and continue with the acquisition of your commercial license.
Prepare a Memorandum of Association (MOA) and Article of Association
This is an important document that must be written properly and carefully. It defines the proportion of restrictions and freedoms that each partner in the company has, while statutes or LSAs describe the roles and compliances agents must fulfill. The MOA/LSA is a legal document and must be prepared with the help of legal counsel. They also need to be translated into Arabic.
Registration of Business
This is one of the final steps in starting your business. Fill out the registration application form, once filled in correctly and the required documents are attached, send it to DED for approval. Notification of acceptance/rejection is made within one week.
Apply for Business License
Once registered, the business license will be processed and issued mainly depending on the type of business and business jurisdiction. It takes about a week or so to get a trading license after you get your first one.
Collect the License and Pay Fees
After you fill out the license form and submit the documents, DED will issue a payment receipt. Final payment must be made to obtain a business license. As soon as you receive your trading license, you will be a fully-fledged company.
Documents Required for Starting a Business in Dubai
Here is the general list of documents and certifications that are required for business setup in Dubai.
- License Application
- Attested LLC Agreement
- Governmental Forms
- Name Reservation Certificate
- Initial Approval Certificate
- External Departments Approval
- Tenancy Contract
- EJARI Registration Certificate
- Passport Copies Partners and NOC for Partners (if any)
- Dubai Chamber of Commerce and Industry Registration